A problem often discussed in the engineering economy literature is the oil-well pump problem.} Pump 1is a

Question:

A problem often discussed in the engineering economy literature is the "oil-well pump problem."} Pump 1is a small pump; Pump 2 is a larger pump that costs more, will produce slightly more oil, and will produce it more rapidly. If the is 20%, which pump should be selected? Assume that any temporary external investment of money earns 10% per year and that any temporary financing is done at 6%.

MARR
Minimum Acceptable Rate of Return (MARR), or hurdle rate is the minimum rate of return on a project a manager or company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other...